USDMYR Technical Analysis

The US Dollar was lower against the Ringgit on Friday and is now trading at 4.4420. The downward movement is characterized as an important ignition of selling force, as the price managed to break below the low of the last few days at 4.4470. The downward movement comes after the release of the Producer Price Index (PPI) data which came in well below expectations (-0.5% real against +0.2% forecast). The PPI measures inflation at the beginning of the production chain as it measures the variation in the price of inputs used by the producer to manufacture its products. The lower PPI data add a greater view of a fall in the USD, since if inflation is under control, one of the paths adopted by the FED will likely be to reduce the path of the increase in interest rates. This will make investors see US fixed-income securities as possibly less attractive. With the expectation of lower interest rates, USD falls, stock market rises. From a technical point of view, if the selling force holds, it is possible for the USDMYR to drop to 4.3650 where it should find temporary support.